Developer Drawbridge Realty has broken ground on a speculative office development in Rancho Bernardo in San Diego. This is the developer's first speculative office development in more than a decade. The project will cost an estimated $30 million and is expected to deliver in January 2023.
Located at 16707 Via Del Campo Court, the property will feature 27,000 square foot floor plates and 15-foot ceiling heights. This format will support a mix of lab and office space. The property will also feature large window lines for natural light, four parking spaces per 1,000 square feet and a third-floor patio with views of the surrounding valley and hills.
HED Architects is designing the property, and BN Builders is serving as the general contractor on the construction project. JLL's Jay Alexander, Tim Olson and Greg Moore will oversee leasing efforts for the property. Alexander has said that the building's modern design will attract a variety of uses, from tech companies to life science to traditional office users.
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The San Diego market has had a bifurcated recovery from the pandemic. In the second quarter of last year, the market's office availability rate grew 30 basis points to 20.7%. Now, the rate is the highest on record since 2011, according to the latest research from Savills. At 22.4%, the class-A vacancy rate outpaces the market average. Rents were also down. In the second quarter, average rents were $3.12, down from the first quarter when rents were $3.15 and 2.5% from the start of the pandemic. Class-A rents are also down to $3.49 per square foot. Prior to the pandemic, class-A rents were $3.51.
By the third quarter, things started looking up, and the quarter closed with 269,000 square feet of positive absorption, according to a new report from Colliers. Prior, San Diego had five consecutive quarters of negative absorption. The office leasing demand in the third quarter reached levels not seen since 2018 and 2019.
Drawbridge Realty noted the return to work and strong occupancy in its nearby properties as motivators to build a spec office building, despite some uncertainty in the sector. The developer forecasts enhanced demand for class-A quality space as employees return to work.
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Kelsi Maree Borland
